Business Acquisitions |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisitions | Business Acquisitions Acquisitions - Provisional
On October 2, 2023, the Company acquired substantially all of the assets of Hubbard Paving & Grading, Inc., an asphalt and paving company headquartered in Walhalla, South Carolina, for $3.0 million. This transaction added an HMA plant and expanded the Company’s service market in the Upstate region of South Carolina.
On November 1, 2023, the Company acquired three HMA plants and certain related assets from Reeves Construction Company for $18.3 million. This transaction added HMA plants in Concord, North Carolina and Rock Hill and McConnells, South Carolina.
On December 29, 2023, the Company acquired all issued and outstanding membership interests of SJ&L General Contractor, LLC, an HMA and sitework company headquartered in Huntsville, Alabama, for $60.1 million. This transaction expanded the Company’s service capabilities in the Huntsville, Alabama metro area.
On January 2, 2024, the Company acquired substantially all of the assets of Littlefield Construction Company, a soil base, surface treatment and sitework company headquartered in Waycross, Georgia, for $6.4 million. This transaction expanded the Company’s service capabilities in the Waycross, Georgia area.
The total amount of consideration for these transactions remains subject to post-closing adjustments with respect to inventory quantities, settlement of working capital and other matters.
Combined Acquisitions During the Six Months Ended March 31, 2024
The foregoing acquisitions were accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“Topic 805”). As of March 31, 2024, the purchase price allocation had not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed. The Company consulted with independent third parties to assist in the valuation process. The Company expects to finalize the estimate of fair values as soon as practicable and no later than one year from their respective acquisition dates.
Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology described
under "Fair Value Measurements" in Note 2 - Significant Accounting Policies. The amount of the purchase price exceeding the net fair
value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately
$22.2 million, which is deductible for income tax purposes. Goodwill primarily represents the assembled work force and
synergies expected to result from the acquisitions. Upon finalizing the accounting for these transactions, management
expects to ascribe value to other identifiable intangible assets, including customer relationships and customer backlog, which will
reduce the provisional amount allocated to goodwill.
Total consideration transferred for these acquisitions was $87.9 million, which was paid from available cash and a draw from the Revolving Credit Facility (as defined in Note 8 - Debt). The combined total consideration has been provisionally allocated as follows: $13.2 million of net working capital, $51.8 million of property, plant and equipment and $22.9 million of goodwill and intangibles.
The Consolidated Statements of Comprehensive Income (Loss) include $17.4 million of revenue and $0.9 million of net loss attributable to the operations of these acquisitions for the three months ended March 31, 2024 and $22.1 million of revenue and $1.2 million of net loss attributable to the operations of these acquisitions for the six months ended March 31, 2024. The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $0.3 million for the three months ended March 31, 2024 and $0.8 million for the six months ended March 31, 2024.
The following tables present pro forma revenues and net income as though the acquisitions had occurred on October 1, 2022 (unaudited, in thousands):
Pro forma financial information is presented as if the operations of the acquisitions had been included in the consolidated results of the Company since October 1, 2022, and gives effect to transactions that are directly attributable to the acquisitions, including adjustments to:
(a)include the pro forma results of operations of the acquisitions for the three and six months ended March 31, 2024 and 2023;
(b)include additional depreciation and depletion expense related to the fair value of acquired property, plant and equipment and reserves at aggregates facilities, as applicable, as if such assets were acquired on October 1, 2022 and consistently applied to the Company’s depreciation and depletion methodologies;
(c)include interest expense under the Revolving Credit Facility as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2022 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2022 through March 31, 2024, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2022 through March 31, 2024); and
(d)exclude $0.8 million of acquisition-related expenses from the six months ended March 31, 2024, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2022.
Pro forma information is presented for informational purposes and may not be indicative of revenue or net income that would have been achieved if these acquisitions had occurred on October 1, 2022.
Provisional Accounting
In April 2023, the Company acquired an HMA paving company headquartered in Anderson, South Carolina. In May 2023, the Company acquired an excavation, grading and utility company headquartered in Huntsville, Alabama. As of March 31, 2024, there had been no material adjustments to the September 30, 2023 provisional accounting for either acquisition as reported in the 2023 Form 10-K.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||